House Republicans Call for Investigation into Direct Lending

November 6, 2012

The House Education and the Workforce committee has asked the Government Accountability Office to investigate servicing issues in the Direct Loan program, including the performance of loans under both direct lending and federally guaranteed lending and servicing problems that some borrowers are reportedly experiencing. The Education Department's system has had gaps and errors since it began issuing all student loans in 2010, including servicing problems that left some students unable to rehabilitate defaulted loans. House Republicans, who opposed the switch to direct lending, said the recent complaints were "troubling."

Tiffany Edwards, a spokeswoman for the committee's Democrats, said the program "should be held to a high standard and be working in the best interest of students," comparing direct lending favorably to the former bank-based lending program.

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